Gone in a Redbox Instant

Less than two years after it launched, Redbox Instant by Verizon is shutting down. In a notice posted online and emailed to customers, the Redbox Instant team announced that the streaming video service will cease operations at 11:59 p.m. PT on October 7. Information on service refunds will be released on October 10.

Designed to be a rival to Netflix Inc. (Nasdaq: NFLX) in the rapidly growing online video market, Redbox Instant was formed as a joint venture between Verizon Communications Inc. (NYSE: VZ) and Outerwall Inc. ., the parent company of Redbox Automated Retail LLC . In an emailed statement, a Redbox Instant spokesperson acknowledged that the online subscription movie rental service "had not been as successful as either partner hoped it would be." Commenting on what Verizon would do next in the streaming space, the spokesperson added: "We're always looking for innovative ways to serve our customers, but don't have anything further to discuss at this time."

Rumors that Redbox Instant would wind down first emerged in late September. At the time, Verizon declined to comment on the possibility, but poor subscriber numbers and the suspension of new customer registrations painted a dire picture for the joint venture. (See Is Redbox Instant Shutting Down?)

Now that a shutdown is confirmed, Verizon becomes the second major pay-TV provider in the US to cut its losses with an online streaming service. Comcast Corp. (Nasdaq: CMCSA, CMCSK) largely decommissioned its Streampix video offering two weeks ago, deciding instead to fold the service into its main Xfinity app and website. (See Comcast Turns Off Streampix.)

Keep up with the latest in OTT video developments on our dedicated OTT video content channel here on Light Reading.

However, while pay-TV providers haven't done well with over-the-top services so far, that doesn't mean they won't keep trying for a winner. Numerous operators have OTT plans for 2015, including AT&T Inc. (NYSE: T), Dish Network LLC (Nasdaq: DISH), and -- once again -- Verizon. Indeed, Verizon CEO Lowell McAdam said the telco would kick off a new OTT service in the first half of next year, using the OnCue assets that the company picked up from Intel Corp. (Nasdaq: INTC). Although Verizon isn't sharing details, it's possible that some of the Redbox Instant team will end up working on the new mobile IP video offering. (See Verizon Plans Mobile TV Service in 2015 and Why Did Verizon Buy OnCue?)

As a side note, Redbox Instant originally stopped accepting new customer registrations several months ago because of apparent credit card fraud issues. However, a spokesperson emphasized that "based on a thorough investigation, we have no reason to believe that any of our customers' information was compromised."

— Mari Silbey, special to Light Reading

wanlord 10/7/2014 | 12:39:07 AM
Re: Highlights the problems with video streaming services that aren't Netflix.... One of the things that baffles me about Verizon is that some executives continue to make really bad decisions but seem to stay around, get promoted, or moved on to screw up some other product, yet they are wasting billions of dollars which impact employees and impact stockholders.  I can understand trying to promote the culture of trying things and being bold and being okay to fail, but when you just plain old try to copy other business models or launch products and slapping a VZ logo on it, with no solid strategy, it's crazy. Between CDN, VDMS, OTT stuff, they seem to consitently fail. Their culture just can't support it. They really need to cut half the company and half the products. They are just trying to do too much and have ADD.
mhhf1ve 10/6/2014 | 7:13:49 PM
Highlights the problems with video streaming services that aren't Netflix.... If a video streaming service is NOT Netflix, it has a few huge hurdles to overcome: 1) a decent video selection which costs $$$ to license, 2) customer acquisition costs to get to breakeven for that video library license, 3) a decent user experience so that users actually enjoy using the service, 4) freedom from problems like lawsuits/connectivity blocks/fraud/etc.

Amazon and Google (and maybe Apple & MSFT) can spend the $$$ to get content licensing deals (and they have the user data to make sure they can buy the "right" content as well), and these big companies also have the tech know-how to avoid the fraud and connectivity issues that can plague a video streaming service. But beyond these companies, it's not easy to build up a video streaming service from scratch, and in all cases, it takes a significant amount of $$$.

Do ISPs really want to get into this game? I think it might be some kind of lock-in for subscribers if you can actually offer a decent service, but just getting to the point of offering a decent service isn't a no-brainer.

sam masud 10/6/2014 | 3:38:13 PM
No surprise Okay, so smart people can do not so smart things. It was always going to be an uphill battle against Netflix, but exactly did VZ do to entice users away from Netflix? A johnny-come-lately me-to is not much of a value proposition. Redbox Instant will hardly be missed.
KBode 10/6/2014 | 1:47:36 PM
Poof It's astonishing to me that the security breach happened in June and the service just kind of sat in a limbo of sorts since then. I wonder if Red Box will have any association with the TV service Verizon plans for 2015?
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